Sports Marketing and Sponsorship - UK - June 2011

There are various ways of defining the concept of sponsorship. One useful version, put forward by S Sleight in the 1989 publication Sponsorship – What It Is And How To Use It, reads as follows, and is used by Mintel as a guide throughout this report:

"Sponsorship is a business relationship between a provider of funds, resources or services and an individual, event or organisation, which offers in return rights and association that may be used for commercial advantage."

Within this framework for the sector, Mintel’s analysis and value statements are confined to:

events taking place in the UK

international events, part(s) of which take place in the UK

representative organisations and governing bodies based in the UK.

Sponsorship of individual athletes is not included in value assessment but is included in discussion.

The cyclical nature of the sports sponsorship market and the high proportion of deals whose value goes unreported mean there is no reliable measure of brand expenditure in this market at present. Values included in this report refer to new deals only, but give some indication of trends in the market in terms of both the number of deals being done, and the value of these.

Most of the small-scale sponsorship deals that exist are not included in the market size. That is, local or regional projects or events, local sports leagues and anything else that is not reported in the national media and is, therefore, not quantifiable.

Sponsorship versus donations

One of the key difficulties that exist in assessing the size of the sponsorship market lies in drawing a distinction between sponsorship and donations.

In general, sponsorship and donations have very different objectives for companies, with the former originating from their marketing departments and the latter from a donations committee or something similar. However, where large sums or complex funding arrangements are involved, or where a corporation’s leading executive – most probably a founding entrepreneur – is likely to make personal decisions on both sponsorships and charitable contributions, sponsorship and donations are often combined in a single package.

A third type of involvement complicates the picture further, in the form of corporate patronage, a half-way house between donations and sponsorship that generally provides only some recognition of a company’s activity among a relatively small, though influential, group. Although this is more common in the arts than sport, it is pertinent to mention because of the instances where it does occur.

The difference between sponsorships and donations is often obscured. However, the main distinction between them is based on four factors:

Source of funds – Sponsorship is typically funded by marketing, advertising or communications budgets, while donations come from charitable donations or philanthropy budgets.

Cost of funds – Sponsorship is written off as a full business expense in the same way as media placement costs, for example, while the ability to write off donations is limited to 75% of net income.

Aims of the funding – The main goal of sponsorship is to help a company sell more products/services or to increase positive awareness of the company among its consumers and possibly government. Donations, in contrast, are designed to show a company is a good corporate citizen and to improve the company’s image with its closest stakeholders (eg employees, shareholders, suppliers).

Where the funding goes – Sponsorship is usually directed to events, teams, arts or cultural organisations, projects or programmes. A cause is sometimes associated with the undertaking, although this tends to be a secondary element. Donations, in contrast, are typically primarily cause-related (education, health, diseases, disasters, environmental), but can also be culture-, arts- or sports-related.

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